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Deconstructing Conservative Excuses For Not Expanding Medicaid

03 Aug

One of the bigger points to emerge from the Supreme Court’s decision over the Affordable Care Act is the striking down of the provision that the federal government could cut existing Medicaid funding to the states if they opted not to participate in the ACA’s Medicaid expansion. While this aspect of the decision didn’t get much media attention, at least initially, it has generated an enormous amount of dialogue among policy circles–especially now that several states, among them Texas and Louisiana, have vowed not to participate in the expansion.

The immediate consequence of states opting out is that fewer uninsured Americans will gain coverage from the ACA, and those that continue to be uninsured will be some of America’s poorest citizens. Considering how much financial help the federal government is going to give states to participate in the expansion, the decision not to participate seems like nothing more than political retaliation at the expense of the most vulnerable members of the public. But could there be more to it than that?

Conservatives say yes. In fact, I was intrigued to read a post entitled “Why not expand Medicaid?” from Keith Hennessey, who spent time as the Director of the National Economic Council under George W. Bush. You can read his original post here. For the most part, the points are valid, but they aren’t exactly the complete story. Allow me to rectify that.

1. “Leaving federal money on the table” looks at the problem backwards.
The federal government is going to pick up the entire tab for the expansion for the first three years. After that it phases down so that, by 2020, the feds pay 90% and the states pay 10%. Liberals have been acting like this is free money to the states. Conservatives are saying “Not so fast. We have to spend money to get money.” Miraculously, both sides are right. The states will have to spend some money after the three years are up, but they’re still getting a great deal. In fact, one could easily argue that if they had any intention of ever extending coverage to the low-income uninsured in their state, this will be the cheapest option they’ll ever have. That they are passing on the opportunity strongly suggests that they really don’t care if the poor go without coverage.

2. A smart Governor recognizes that a commitment to expand Medicaid eligibility is likely to be permanent, so she may be risk averse.
Here, the thinking is that once you expand Medicaid, you’ll never be able to go back, and signing up for an expanded entitlement program seems a bit risky. I actually tend to buy this argument, insofar as it explains the psychological resistance to change that has shaped the majority of incremental American policy-making, including our seeming inability to reform health care in the past. Perhaps the Governors of these red states are taking a wait and see approach before joining the expansion. This wouldn’t be the first time. The basic Medicaid program is optional for states. While it was created in 1965, the last state to participate, Arizona, did not get with the program until 1982. In other words, there is a precedent for this sort of thinking from the states. Of course, I also find this encouraging in that it means that all states are likely to fully participate in the Medicaid expansion sometime around 2031.

3. A Governor must also worry about creeping federal requirements for this new population.
This is just #2 with slightly different wording. In other words, if we join in the expansion now, what protects us from you changing the rules of the game later? This is a fair point, but if the federal requirments grow that oppressive, the states can always stop participating in the expansion. Moreover, they can do so without fear of federal repurcussions, thanks to the Supreme Court ruling.

4. There are hidden costs to this expansion.
The hidden cost argument is that choosing to participate in the expansion will also cause other individuals who are currently eligible for Medicaid but not enrolled, to enroll in the program. This troubles states because the generous federal coverage applies only to the newly eligible population under the expansion, not to currently eligible but not enrolled individuals. I find this one a bit laughable, despite the fact that it’s absolutely true. If people are eligible for benefits, but not enrolled, it saves the state money. Clearly, this argument belies the states’ preference that eligible individuals remain unenrolled rather than add to the budget. The poor uninsured lose again.

5. Adding new people increases government spending and total spending on health care.
In the explanation for this argument, an equation is provided: More People X More Medical Care = More Spending. If you don’t engage your brain very hard, that makes sense, but here’s why it’s wrong: The real equation is Volume X Price = Spending. Yes, more people and more medical care means more volume, but for which types of services? If providing people with coverage means that they get more preventive care and stay well, the price of the care they use will be lower than if they went without care for years and then showed up at the emergency department rife with comorbidities. In short, we don’t really have enough data to know if this expansion will increase or decrease health care spending. As an aside, there’s also this point: If people are acknowledging that Medicaid coverage will lead to increased utilization of medical care, that means that they are acknowledging by default that the low-income uninsured aren’t getting all the care they need now. So, if conservatives want to raise this argument, I don’t want to hear them say that everyone has access to care because they can just go to the emergency room.

6. A Governor creates negotiating leverage with the Feds by saying no, even temporarily.
Yeah, this is absolutely true. In fact, I think this is the most honest of all the arguments in favor of not participating in the Medicaid expansion.

7. If it’s such a good deal, why did the Feds mandate it?
Um, because they realized the strong attraction of the immediately preceding point #6? Democrats probably decided to do this sometime around the moment they realized that the GOP was going to vote against everything they proposed without reading it.

So, there you have it. There are 7 reasons why conservatives might choose not to participate in the Medicaid expansion. I think my rebuttal to these arguments indicates that some of them are better than others, and that the bottom line is that red states are more concerned with playing political games in the name of fiscal conservatism than they are with making sure that their most vulnerable citizens have health insurance.

 

 

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Posted by on August 3, 2012 in Medicaid

 

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